11.30 am

The Crown and Tranz Rail have completed the Crown's purchase of the Auckland rail corridor.

The announcement today by Finance Minister Michael Cullen, Transport Minister Mark Gosche and Tranz Rail Managing Director Michael Beard confirms the details agreed in the exchange of letters between the parties in September.

"The Government entered the negotiations with clear objectives and we have achieved them. Auckland can plan its future transport needs and the part rail will play with certainty," the Ministers said.


"Auckland now has the corridors it requires for a rapid transit system while freight services to Northland are preserved and we are satisfied a fair and equitable price has been negotiated."

The first $75 million of the $81 million would be paid immediately. The balance would be paid on satisfactory conclusion of negotiations over train control and track maintenance and other interim services, all of which Tranz Rail would provide for the next five years.

Tranz Rail would continue to run passenger services under the existing contract until at least June 2003.

Detailed negotiations on these on-going operations are expected to be finalised in the first quarter of next year.

"We are pleased to finalise this sale that gives the Auckland Regional Council responsibility for Auckland passenger rail, while preserving Tranz Rail's rights to the freight business," said Mr Beard.

Today's deal is part of a move by Tranz Rail to refocus its business around its long-distance freight services.

The rail operator has so far outsourced its forklift, locomotive services and infrastructure businesses and signed a $33 million deal with Australia's West Coast Railway to run its long-distance passenger services through a 50:50 joint venture.

Competition watchdog, the Commerce Commission, last week turned down British-based Stagecoach Group's bid to take a half share in a joint venture with Wellington Regional Council to buy Tranz Rail's Wellington suburban rail network.

Shares in Tranz Rail last traded on Friday at $3.95. They were placed on a trading halt pending the announcement.